Interview: Adara Ventures Energy with Alberto Echeverri

Our Partner Alberto Echeverri sat down with the Zero One Hundred ESG & Impact Talks podcast to discuss the role of VC in driving the energy transition and our motivation for launching Adara Ventures Energy – our first Pan-European Article 9 fund focused on deep tech technologies enabling the energy transition.  

Below are some highlights from the conversation. You can listen to the full episode here or read the full transcript here.

Thank you again to Laura Iriarte Zabalaga for a great discussion!

What motivated Adara to venture into the energy transition sector with a fund today?

When looking at different verticals, we realized that the energy sector, particularly in Europe, was going through an ongoing, massive transformation. 

The energy space is fragile and very difficult to balance. It's necessary to find the right harmony between three dimensions that compete with each other. This is what is called the energy trilemma: 

• The first dimension to address is affordability. It’s important to make energy as affordable as possible. 
• The second dimension is sustainability. It’s important not to harm the earth or the ecosystem when producing energy. 
• The third dimension is the security of energy supply, or reliability. When someone gets home and opens their fridge, it works. When switching on the lights, they work. The industry can reliably plan what to produce because there will be energy. 

There is a constant tension between these three dimensions, and it’s a problem that is becoming increasingly complex. 

At Adara, we realized there is an opportunity when changes, disruptions, or imbalances do not find their natural equilibrium. This is where we saw the opportunity and why we decided to launch a fund specifically targeted at energy and the opportunities in this sector.

What is the role of venture capital firms like Adara in balancing this energy dilemma?

Due to today's increasingly dynamic geopolitical and societal challenges, we see constant imbalance –with the extreme prioritization of one dimension or approaches that combine only two of them.
We need to go back to combining the three of them. And that requires innovation. That requires new technologies. With the development of new computing capabilities, we're seeing more and more opportunities to deploy software that will help find a balance between the three. 

At the same time, as software deployment increases, so does the attack surface for cybersecurity incidents. So we are also seeing many opportunities arise around cybersecurity.

What are the main areas that this AVE fund will be covering when looking for investment opportunities?

The first one is the integration of intermittent technologies or renewable technologies in the system. It's not just plug and play; energy generation went from predictable and controllable to intermittent and difficult to plan for.

The second area is how to transport that energy. In the last 30 years, we have seen the world's electricity consumption double. Looking at any forecast—be it 30 years, 20 years, or 40 years—we're also going to double the size of the electric system, meaning we also need to reinforce the transportation infrastructure for energy. 

On average, 70% of the world's grids are over ten years old. The paradox is that we need to grow, but at the same time, we need to replace, which multiplies the size of the investment massively. The answer cannot be to throw more iron to the grid or add more hardware. We need to have a more efficient grid. As soon as expansion starts, bottlenecks and excess capacity form that can be optimized again with software. 

We are also seeing a lot of opportunities in maintenance and prevention. Aging infrastructures on the grid are introducing several problems, including increasing maintenance costs. There are a lot of issues with vegetation in some countries, creating significant hazards like fires, for example. We saw that quite dramatically in the last few years in the US. 

Finally, the third opportunity involves consumption. The flexibilization of consumption is an opportunity to improve the system load. This is an important area we will be looking at, which includes everything related to creating virtual consumers, optimization, micro-cuts in the grid, and nonlinear consumption. 

All those opportunities can optimize how the energy system operates, horizontally. That will be how to deal with all the data and protect all of the infrastructure involved.

With cybersecurity, where many of the new applications are, we see new generative AI solutions to optimize many of the applications I'm describing. That is an underlying backbone we are also looking at in this sector. 

What is the difference between the Adara Ventures Energy fund and an impact, Article 6 or Article 8 fund?

Adara Ventures Energy is an Article 9 fund. We decided to go for Article 9 because we believe it was a good transition for us from the previous Article 6 funds that we are managing today. 

It's not just about the financial return, but it's also about sustainability. Since this fund is going to be dedicated to energy, we believe this is the right thing to do. You cannot invest in energy, at least according to our values, without trying to promote the decarbonization of the system. And that decarbonization is the keyword for us. Sustainability for us means decarbonization.

👉 Continue reading the full conversation here or  listen to the full episode here.‍

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💡 Learn more about the investors supporting Adara Ventures Energy Fund, including the European Investment Fund (EIF) and energy leaders Redeia (via its technology platform Elewit) and Grupo Energía Bogotá.

🚀 At Adara, we believe startups will be at the forefront of innovation in the energy sector, developing cutting-edge technologies and solutions that challenge conventional energy systems. If you're interested in learning more or supporting solutions for the energy transition, please get in touch.